Market may remain volatile ahead of F&O expiry

Equities may remain volatile in a truncated trading week as traders roll positions in the derivative segment from December 2009 series to January 2010 series ahead of the expiry of the near-month December 2009 contracts on Thursday, 31 December 2009. Higher advance tax figures by India Inc which suggests better Q3 December 2009 results, may support the market.

The trading volumes are likely to take a hit as foreign fund managers will be on year-end vacation. Trading resumes on Tuesday, 29 December 2009, after a four-day break. The market remains closed on Monday, 28 December 2009 on account of Moharram. It again remains closed on Friday, 1 January 2010 for New Year holiday.

The latest data showed that corporate advance tax payments for the October-December 2009 quarter shot up sharply, suggesting a higher profit growth in corporate sector in the third quarter (October-December) of the current fiscal. Corporate advance tax payments for the quarter were up 44% to Rs 48,300 crore against a 3.7% decline in April-June quarter and a 14.7% increase in July-September quarter. The company-wise break-up of advance tax collection suggests a broad-based recovery with automobiles, cement, metals and consumer goods, doing well.

Trade minister Anand Sharma said on Thursday 24 December 2009 that infrastructure sector grew 5.3% in November 2009. Infrastructure sector output grew 3.5% in October 2009 from a year earlier. The sector accounts for 26.7% of the country's industrial output.

Investors will watch food price index data for the year to 19 December 2009 on Thursday, 31 December 2009, at a time when food inflation is hovering at 20%. The high food price inflation is a major worry for the policymakers as they contemplate a right approach to tame hike in inflation which seems to be more of a supply side issue. The next quarterly review of monetary policy is scheduled on 29 January 2010.